Amarin shares slump on FDA panel rejection

Shares in Irish drug company Amarin slumped as much as 64 per cent on Thursday, a day after an advisory committee to the US Food and Drug Administration voted against allowing the company's triglyceride-lowering drug for use in a broader patient population.

Triglycerides are blood fats which, at elevated levels, are linked with cardiovascular disease.

The advisory committee recommended that the drug's approval be kept pending until the results of an 8,000-patient trial indicate whether the drug, Vascepa, actually does reduce cardiovascular risk. Results of the trial are not expected until 2016.

Amarin was seeking approval for Vascepa in reducing heart risk in patients with blood fat abnormalities, who also take cholesterol-lowering statins such as Pfizer’s Lipitor.

The FDA must make a decision on Amarin’s application by December 20th. It does not have to follow the advice of the panel but is expected to do so after the 9-2 vote against immediate approval of expanding the drug’s market.

"Given the negative panel vote, we do not expect an approval on the December 20th date and see this outcome as a significant setback for Vascepa's commercial outlook," JP Morgan Securities analyst Chris Schott wrote in a note.

Expanded approval would give Dublin-based Amarin access to 36 million potential US customers who have elevated triglycerides, or nine times the pool of people with severely high levels. Vascepa is already approved to lower triglyceride, or blood fat levels, in patients who are not also taking statins.

Jefferies & Co analysts slashed their price target on Amarin shares to $4 from $20, saying the stock was worth only $1 without the expanded indication.

"The delay in approval enhances the risk and impact of generic Lovaza in the first quarter of 2015 on both Vascepa share and price," the analysts said in a research note.

Lovaza is the only other existing treatment approved for lowering triglyceride levels. It is marketed by GlaxoSmithKline.

Trading in Amarin stock, which had already dropped 54 per cent in the 12 months through October 15th, had been halted on Wednesday when the FDA panel sat to consider the issue and hear representatives from the company and the FDA.

Amarin is studying Vascepa's ability to reduce cardiovascular events. The company estimates key costs of $30 million to $40 million this year related to the study and "costs continue to be fairly significant for a good portion of next year," president John Thero, said on a conference call yesterday after the panel meeting.

Sales of Vascepa, the company’s sole product, may reach $1.2 billion in 2017, according to the average of five analysts’ estimates compiled by Bloomberg. The company’s revenue is estimated to total $36 million this year. – Reuters / Bloomberg